WASHINGTON -- Bush. Gore. Bush. Gore.
The conventions may be over, but so far, it's hard to tell which presidential candidate would be kinder and gentler to the nation's pension system.
"It's not clear who the bad guys are, nor who the good guys are. They don't seem to split up by party," said Sylvester J. Schieber, director of research at Watson Wyatt Worldwide in Bethesda, Md.
Both Republicans and Democrats are taking credit for recent changes in pension laws, many of which attempted to undo damage done by both sides during the 1980s and early 1990s.
The Republican Party's platform trumpets "the Republican legislation that has simplified pension law and made it easier for more businesses, especially small ones, to offer pension plans."
The Democratic Party's platform has a similar ring: "Democrats have successfully passed reforms to simplify the pension process for small businesses, expand pension portability and protect employee pension funds."
But the Democratic platform, which offers far more details on the subject than the Republican one, also suggests that Democratic presidential nominee Al Gore would require employers to give workers more information when they alter their pension plans, particularly in conversions to cash balance plans.
"We believe these changes need to be carefully examined by independent agencies to make sure they abide by current federal law," the platform states.
The platform also hints that Mr. Gore, if elected, would adopt the Clinton administration's wariness of a broad-based pension and retirement bill that would let workers save more through 401(k) plans and individual retirement accounts. The bill passed the House of Representatives by a 401-25 vote July 19, and is scheduled to be marked up by the Senate Finance Committee Sept. 7.
Mr. Clinton had vetoed a similar bill last September.
"Democrats support President Clinton's veto of the Republican tax scheme that would have diminished anti-discrimination protections for middle-class and lower-income workers," the platform states.
Mr. Gore also has proposed creating individual accounts that would help low- and middle-income working families supplement their Social Security savings through tax credits for contributions they make to those accounts.
A married couple making up to $30,000 a year would receive up to $3,000 in tax credits on top of their contributions of $1,000, while a couple making up to $100,000 would receive a matching tax credit of $1,000 on top of $3,000 they would be allowed to contribute.
While the AFL-CIO hailed the proposal as a good effort to expand retirement plan coverage, the proposal has come under fire from both Republican nominee George W. Bush's camp and the Pension Rights Center, which said it is flawed because few low-income workers can afford to pony up their own cash to get the government match.
Ron Gebhardtsbauer, a senior pension fellow at the American Academy of Actuaries in Washington, who has studied the proposal, estimates only 10% to 20% of the government-matching funds would go to families making less than $30,000 -- because it's difficult for them to contribute.
Mr. Gore's positions also make some employer representatives nervous, although none would admit it on the record.
"There is a faction within the Democratic Party that has tried to hold on to defined benefit plans and that is a losing battle," said a Washington pension lobbyist who did not wish to be identified. "Someday all of us will probably have an IRA, 401(k) plan or defined contribution plan as a main source for retirement."
Others expect that if pension reform legislation falls victim to election year wrangling, it will get a friendlier reception next year if Mr. Bush becomes president.
But while Mr. Bush's key economic advisers might be expected to take positions favoring the growth of 401(k) plans and IRAs, Mr. Bush has failed to give even a small clue about his position on retirement issues.
"We're left to fill in the blanks," said James M. Delaplane Jr., vice president of retirement policy at the Association of Private Pension and Welfare Plans, Washington. "But if you had to hazard a guess as to which president would be more supportive of plan sponsors, it would probably be Bush."
That theory could backfire, some pension experts warned.
For one thing, Mr. Bush already has vowed to offer a tax cut estimated to cost $1.3 trillion over 10 years that might leave no room for raising contribution limits on 401(k) plans and IRAs.
For another, if the Republicans retain control of Congress, Mr. Bush might eliminate income tax rates in favor of the flat tax preferred by Texas Republican Richard K. Armey, House majority leader, and Bill Archer, chairman of the House Ways and Means Committee.
Such an overhaul would greatly reduce the appeal to employers of tax-favored pension plans, said Dallas L. Salisbury, president of the Employee Benefit Research Institute, a Washington-based non-partisan research organization.
"If the choices are between increasing 401(k) limits or a cut in taxes, (Mr. Bush's) preference would be let's just lower taxes and better let people keep the money than worry about tax incentives," Mr. Salisbury said.
But, if Mr. Gore wins the presidency and the Republicans keep control of Congress, Republican lawmakers probably will continue to push for expansion of employers' and employees' ability to save through retirement and pension plans.
Social Security ideas
And while the candidates have very different ideas on how to save Social Security, both suggest solutions involving individual accounts.
Although Mr. Bush has not provided details, his proposal likely would carve out a portion of the payroll tax, probably two percentage points, that workers would be able to contribute to individual accounts through which they could invest directly in the stock market.
Mr. Gore favors paying down the federal government's debt and using the interest saved to shore up the system, then giving low-and middle-income workers the choice of saving on top of their payroll taxes through Retirement Savings Plus Accounts.
Mr. Bush also has said he will not raise payroll taxes.
Unfortunately, experts said, neither proposal would solve the system's problems.
A recent study by the Century Foundation, a New York-based research organization, found that Mr. Bush's proposal, which could exacerbate the system's shortfall by diverting contributions into individual accounts, would result in benefit cuts for younger workers, who would shoulder the responsibility of not only paying for the older generation's retirement, but also contributing for their own.
The study found Mr. Bush's proposal could result in an overall drop of income of 20% for younger workers.
At the same time, Mr. Gore's proposal could cost $50 billion a year in government subsidies for lower- and middle-income workers' for their contributions to the individual accounts alone and would not solve the problem of high administrative fees eating up a large portion of small account balances, according to an analysis by Mr. Gebhardtsbauer at the Academy of Actuaries.
Still, the Gore proposal sits well with unions. "We support strengthening the current system, and are very much against diverting money away from the system," said Shaun O'Brien, a senior policy analyst at the AFL-CIO in Washington.